Factories stay busy in Midwest, Minnesota

  • Article by: Star Tribune
  • Updated: February 1, 2013 - 7:23 PM

Metal and other durable goods see notable growth.

Yes, it is true: Things are finally looking up for the nation's manufacturers.

Stronger sales of cars, appliances and other durable goods kept Minnesota and Midwest factories bustling last month, while improvements in the overall economy led to hiring among many manufacturers nationwide.

On Friday, the Institute of Supply Management issued its strongest U.S. manufacturing report in months, helping to send the Dow Jones industrial average to close above the critical 14,000 mark for the first time since the Great Recession. Separately, a closely watched report from Creighton University said Minnesota manufacturers grew for a second consecutive month in January, thanks to stronger demand for metal and other long-lasting goods.

"Manufacturing is starting out the year on a positive note," said Bradley Holcomb, ISM manufacturing survey committee chairman.

Several local manufacturers have seen a noticeable jump in business, as sectors like housing and autos have moved toward recovery over the past year. Minneapolis-based Graco, which makes spray, pump and lubrication equipment, said Tuesday it saw a bump in orders from construction and automotive customers. And Pentair's residential pool and water filtration divisions have benefited from improving home sales. Pentair has operations in Golden Valley.

"Expansions in the sales of auto and appliance equipment is translating into metal orders," said Ernie Goss, director of Creighton's Economic Forecasting Group. The surge "more than offset" weakness among Minnesota's makers of food, medical equipment and non-durable goods.

For the nine-state Midwestern region that includes Minnesota, Creighton University saw a rise in new orders, wholesale prices, inventories and overall confidence. As a result, the Mid-America Business Conditions Index rose to 53.2 from 49.5 in December. Any number above 50 signals economic expansion.

Still the region, which includes Minnesota, Iowa, North Dakota, South Dakota, Kansas, Wyoming, Arkansas, Missouri, Nebraska, showed a slowdown in hiring and exports.

Nationwide, the ISM report also found continued strength across most regions of U.S. manufacturing.

"The manufacturing sector expanded in January for the second consecutive month and the overall economy grew for the 44th consecutive month," Holcomb said.

U.S. factory orders and employment rose nationwide in January thanks to improving conditions for manufacturers of plastics, textiles, furniture, printed goods, clothing, appliances, equipment and metal. In fact, all six of the key component indexes that ISM tracks -- new orders, production, employment, supplier deliveries, prices and inventories -- registered above 50 in January. That prompted a rise in the overall index to 53.1 from 50.2 in December.

Jarod Allerheiligen, managing partner for Grant Thornton's Minneapolis office, credited the ISM report with Friday's run of the Dow Jones Industrial Average.

The spike "is being attributed to the employment confidence shown in the ISM report," Allerheiligen said, noting that the ISM numbers were a "nice surprise. ... I think manufacturing is doing well and is a good sign for the overall economy. Certainly the markets are reacting well."

Overall, the nation gained 157,000 new jobs last month, which also bolstered the Dow.

Companies that were put off by fiscal cliff and debt ceiling uncertainties in December appeared to make up ground in January, he said. In addition, the national job situation showed stronger housing numbers and hiring gains in construction for the month. Both helped manufacturers, he said.

Dee DePass • 612-673-7725

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